Opinion
C.A. 03-1603
November 25, 2003
ORDER AND REASONS
Plaintiff, Dodson Hooks, APLC, ("Dodson") has filed this motion to remand. Defendant, C. John Caskey, Jr., ("Caskey") opposes the motion. For the reasons that follow, the motion is GRANTED.
BACKGROUND
The underlying dispute between Dodson and Caskey arose from the dissolution of their professional association and it involves a bitter dispute over the representation of multiple clients in litigation pending in U.S. District Court in the Eastern District of Louisiana. From late 1999 to December 31, 2002, Caskey was employed as an attorney by Dodson. On December 18, 2002, while still employed by Dodson, Caskey successfully negotiated a settlement agreement among all interested parties in the Freret Marine litigation as to amounts due to be paid to and on behalf of the crew of the M/V ENCHANTED CAPRI. Caskey's professional association with Dodson was terminated as of January 1, 2003.
Freret Marine Supply et al v. M/V ENCHANTED CAPRI, C.A. No. 00-3805, and consolidated cases, hereinafter referred to as the "Freret Marine litigation". The clients are seamen and members of the crew of the M/V ENCHANTED CAPRI.
Record document #2 in C.A. 03-379, Middle District of Louisiana, "Defendant's 28 U.S.C. § 1447(B) Compliance" (hereinafter "Compliance"), Item 1, Ex. "N", Dodson Hooks, APLC v. C. John Caskey", Suit No. 505-994, 19th Judicial District Court, at ¶¶ 3-8. The full amount of the settlement agreement was $834,649.29, which included $484,491.61 for wages due the crew members. In early 2003, the funds were disbursed to Dodson by the Clerk of Court for distribution according to the terms of the settlement agreement.
On March 25, 2003, Dodson filed a petition for a temporary restraining order and preliminary and permanent injunction in state court. The petition alleges three state law causes of action against Caskey, i.e., breach of fiduciary duty, unfair trade practices pursuant to La. R.S. 51:1401 et seq., and breach of contract. It requests relief in the form of a judgment restraining Caskey, his agents, employees or representatives from soliciting or having any business contact with, or representing or continuing to represent, any clients of Dodson that were Dodson clients at any time during the period within which Caskey was "Of Counsel" with Dodson.
Dodson Hooks, APLC v. C. John Caskey, Suit No. 505-994, Section 25, 19th Judicial District Court.
Id., Compliance, Item 1, Ex. "N" at ¶¶ 15-23.
Id.
Judge Curtis A. Calloway, 19th Judicial District Court, granted a temporary restraining order ("TRO") against Caskey on March 27, 2003. The TRO was set to expire on April 10, 2003. On that date, Judge Calloway considered Dodson's motion for a preliminary injunction and, on April 11, 2003, entered a judgment in favor of Dodson granting a preliminary injunction and requiring Caskey to post a bond in the amount of $150,000.00, which he posted.
Id., Item 2, Ex. 2. At that time, Dodson posted a $50,000.00 bond.
Id., Items 14, 15 and 16, Exs. 14, 15 and 16. Dodson had also filed two motions for contempt of court. One alleged that Caskey continued to contact the crew members of the M/V ENCHANTED CARPI in violation of the TRO; the second was based on his failure to attend a scheduled deposition. On April 21, 2003, Judge Calloway entered a judgment finding Caskey in contempt of court due to his willful violation of the court's TRO and due to his willful violation of a subpoena and subpoena duces tecum by failing to appear at a deposition set for April 3, 2003. Caskey was fined a total of $5,820.00. Caskey's appeal of all judgments is pending before the Louisiana First Circuit Court of Appeals. Id. at Exs. 18, 19, 20 and 21.
Meanwhile, on April 4, 2003, Brent D. Burley, Esq., filed a petition in U.S. District Court for the Eastern District of Louisiana on behalf of fifty-one named plaintiff's, all of whom were members of the crew of the M/V ENCHANTED CAPRI, against Richard J. Dodson, Kenneth H. Hooks, III, Dodson Hooks APLC, Steven Mannear, Michael Colomb, Poynter, Mannear Colomb APLC, and CNA Insurance Company (hereinafter "the RICO complaint"). The petition alleges claims against defendants pursuant to Title IX of the Organized Crime Control Act of 1970, as amended, otherwise known as the Racketeer Influenced and Corrupt Organization Act ("RICO"). On April 15, 2003, appearing "in proper person and as an attorney and officer of this Court", Caskey filed a motion for an accounting of the disbursements of the settlement funds in the Freret Marine litigation, in which he identified Brent D. Burley as "Counsel on Behalf of Emanuele Caligaris and Other Seamen Claimants".
United States District Court for the Eastern District of Louisiana, Barry Schofield et al v. Richard J. Dodson et al, C.A. No. 03-959, Sec. "I", Mag. 1.
Record document #2, Compliance, at Item/Ex. 17; E.D. La. Civil Action No. 00-3805, record document #779. The RICO complaint and Caskey's motion for an accounting in the Freret Marine litigation both arise out of the same set of operative facts.
On April 22, 2003, Dodson filed a third motion for contempt of court in the state court lawsuit alleging Caskey's continuing violations of the court's orders. Dodson claimed that Brent D. Burley was Caskey's agent and that his representation of the crew members of the M/V ENCHANTED CAPRI in the RICO complaint violated the TRO. Dodson also claimed that Caskey's motion for an accounting filed in the Freret Marine litigation violated the state court's preliminary injunction entered on April 11, 2003. Dodson attached a copy of the RICO complaint and a copy of Caskey's notice of hearing in the Freret Marine litigation to his motion for contempt. Judge Calloway set a hearing date of May 20, 2003, on the motion.
Record document #2, Compliance, at Item 22. The injunction states as follows:
IT IS ORDERED, ADJUDGED AND DECREED that the preliminary injunctive relief sought by Plaintiff, Dodson Hooks, is hereby granted, enjoining and prohibiting Caskey, his agents, employees, representatives and all other persons, firms or corporations acting or claiming to act on his behalf, from soliciting in any manner whatsoever, or continuing to solicit, or having any business contact with or representing or continuing to represent, any clients of Dodson Hooks, APLC at any time during which the "Of Counsel" relationship existed with C. John Caskey.
On May 19, 2003, the day before the state court hearing on Dodson's motion for contempt of court, Caskey removed the lawsuit to the United States District Court for the Middle District of Louisiana, alleging federal subject matter jurisdiction pursuant to 28 U.S.C. § 1331. Pursuant to Caskey's motion the lawsuit was transferred to the Eastern District of Louisiana.
Record document #1.
Caskey alleges that the state court litigation "inextricably involves" the Freret Marine litigation and consolidated cases pending in the Eastern District of Louisiana as well as the RICO complaint which Caskey identifies as part of the consolidated Freret Marine litigation. He claims that the petition became subject to removal on May 12, 2003, when Dodson served Caskey with the motion for contempt which referenced and incorporated the federal pleadings. Caskey further asserts that this court has supplemental jurisdiction, pursuant to 28 U.S.C. § 1367(a), with respect to all state law claims alleged in the removed action.
Id. at ¶ 1. The RICO complaint is not consolidated with the Freret Marine litigation or any other lawsuit.
Notice of Removal at ¶ 2.
ANALYSIS
Removal jurisdiction must be strictly construed because federal courts are courts of limited jurisdiction and because removal of a case implicates significant federalism concerns. The party invoking federal subject matter jurisdiction bears the burden of establishing that jurisdiction. In order to determine whether a complaint is removable, the court must "examine the complaint as it existed at the time of removal" and it should not consider subsequent amendments. Any ambiguities are construed against removal. 28 U.S.C. § 1441(b) provides in pertinent part:
Carpenter v. Wichita Falls Independent School District, 44 F.3d 362, 365 (5th Cir. 1995) (citations omitted).
Id.; St. Paul Reinsurance Company, Ltd, v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998), citing Gaitor v. Penninsular Occidental Steamship Co., 287 F.2d 252, 253-54 (5th Cir. 1961).
Herrinqton v. J.R. Pounds, Inc., 847 F. Supp. 133, 136 (S.D.Miss. 1995), citing Nutro Products Corporation v. NCNB Texas National Bank, 35 F.3d 1021, 1023 (5th Cir. 1993) (other citations omitted) .
Manquno v. Prudential Property Casualty Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002), citing Acuna v. Brown Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000).
Any civil action of which the district courts have original jurisdiction founded on a claim of right arising under the Constitution, treaties, or laws of the United States shall be removable without regard to the citizenship or residence of the parties.
Therefore, a civil action filed in a state court may be removed to federal court if the claim is one "arising under" federal law even if diversity jurisdiction is not present. In Arana v. Ochsner Health Plan, Inc. the Fifth Circuit quoted the United States Supreme Court's recent instruction in Beneficial Nat'l Bank v. Anderson, — U.S. —, 123 S.Ct. 2058, 2062, 156 L.Ed.2d 1 (2003) as follows:
Arana v. Ochsner Health Plan, Inc., 338 F.3d 433, 437 (5th Cir. 2003), citing 28 U.S.C. § 1441(b) (2000), pet. for cert. filed, 72 USLW 3282 (Oct. 8, 2003).
To determine whether the claim arises under federal law, we examine the "well pleaded" allegations of the complaint and ignore potential defenses: "A suit arises under the Constitution and the laws of the United States only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution. It is not enough that the plaintiff alleges some anticipated defense to his cause of action and asserts that the defense is invalidated by some provision of the Constitution of the United States." Louisville Nashville R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908); see Taylor v. Anderson, 234 U.S. 74, 34 S.Ct. 724, 58 L.Ed. 12318 (1914) As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim.
Id., quoting Beneficial Nat'l Bank v. Anderson, — U.S. —, 123 S.Ct. 2058, 2062, 156 L.Ed.2d 1 (2003).
In In re: Industrial Life Insurance Litigation, Judge Feldman further explained federal question removal jurisdiction as follows:
To "arise under" federal law for jurisdictional purposes, federal law must create the cause of action stated in the complaint or the state law action must require a construction of federal law. Smith v. Kansas City Tile Trust, Co., 255 U.S. 180, 199 (1921). A federal court has jurisdiction to hear "only those cases in which a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law. Franchise Tax Bd. V. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28, 103 S.Ct. 2841, 2855, 77 L.Ed.2d 420 (1983).
In re: Industrial Life Insurance Litigation, 2002 WL 1359748 *1 (E.D. La., June 4, 2002).
Caskey claims that 28 U.S.C. § 1654 provides original subject matter jurisdiction supporting removal. 28 U.S.C. § 1654 provides as follows:
In all courts of the United States the parties may plead and conduct their own cases personally or by counsel as, by the rules of such courts, respectively, are permitted to manage and conduct causes therein.
Caskey asserts that by virtue of Section 1654 and its reference to the local rules of the applicable federal courts, his right to practice law in the federal courts is exclusively governed by "Federal statutory common law". Citing Donovan v. City of Dallas, 377 U.S. 408, 84 S.Ct. 1579, 12 L.Ed.2d 409 (1964), he argues that pursuant to federal common law, an attorney may never be enjoined or restrained by a state court from representing clients in federal court or seeking the redress of grievances in a federal forum.
Memorandum in opposition to motion to remand, p. 6.
In Donovan, forty-six Dallas citizens, owners of property near Love Field, filed a class action lawsuit in a Texas court to restrain the city from expanding the airport and from issuing and selling municipal bonds to finance the project. 377 U.S. at p. 408-09, 84 S.Ct. at 1580. After a trial, the state court granted summary judgment in favor of the City of Dallas and against plaintiff's. Id. at 409. The judgment was affirmed on appeal to the Texas Court of Civil Appeals. The Texas Supreme Court denied review and the United States Supreme Court denied certiorari. Id. Subsequently, one hundred twenty Dallas citizens, including twenty-seven of the plaintiff's in the prior state court action, filed another action in the United States District Court for the Northern District of Texas seeking similar relief against the city and other defendants. The city filed a motion to dismiss and an answer to the complaint in the federal lawsuit, but at the same time it applied to the Texas Court of Civil Appeals for a writ of prohibition seeking to bar all plaintiff's in the federal lawsuit from prosecuting their case there.Id.
Ultimately, following directions from the Texas Supreme Court, the Texas Court of Civil Appeals issued a writ prohibiting all of the plaintiff's in the federal lawsuit from any further prosecution of that lawsuit and it enjoined them "individually and as a class" from any further litigation of any kind contesting the validity of, or interfering with, the proposed airport revenue bonds. Id. at 410. The federal district court then dismissed the lawsuit before it. Id.
Donovan appealed that dismissal to the U.S. Fifth Circuit Court of Appeals. The Texas Court of Civil Appeals thereupon cited and convicted eighty-seven of the federal plaintiff's of contempt for their violation of a "valid order" of that court. Id. Donovan served a twenty day jail sentence for contempt of court. Donovan thereafter appeared before the federal district court on behalf of himself and those who had been found in contempt of court and, under the threat of further prosecution, imprisonment and fines for contempt of the state court's order, moved to dismiss the appeal. Id. The district court dismissed the appeal.
Donovan's motion stated that it was made under duress.
The United States Supreme Court granted certiorari to determine "the propriety of a state court's punishment of a federal-court litigant for pursuing his right to federal-court remedies." Id. at 413. The Supreme Court held that a state court is without power to take away, by contempt proceedings or otherwise, the right granted by Congress to petitioners, properly in federal court, to have that court decide the issues presented, and to appeal that decision. Id. at 413-14.
The Donovan case is inapposite to this case. First, in Donovan there was no issue with respect to removal jurisdiction of a state court lawsuit or of the preemptive scope, if any, of 28 U.S.C. § 1654. Second, Caskey mischaracterizes the state court's injunction and, as a result, he misconstrues the holding in Donovan. Caskey concedes that Dodson's original lawsuit alleges only state law causes of action. Both the state court TRO dated March 27, 2003, and the preliminary injunction dated April 11, 2003, merely restrain Caskey and his agents, etc., from soliciting, representing, or having any business contact with any "clients of Dodson Hooks, APLC (formerly Dodson, Hooks Caskey), who were clients of Dodson Hooks, APLC at any time during which the `Of Counsel' relationship existed with C. John Caskey." Neither prohibits the parties in the RICO complaint or parties in the Freret Marine litigation from maintaining or litigating their respective actions in federal court, as did the state court's writ of prohibition in Donovan.
Compliance, Ex. 14.
The question of whether Caskey's filing of the amicus curia motion for an accounting in the Freret Marine litigation is in contempt of the state court's preliminary injunction is a question for the state court to decide. The application of 28 U.S.C. § 1654 may be raised by Caskey as a defense in that proceeding, but a federal defense does not create original subject matter jurisdiction supporting removal. In Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 118 S.Ct. 921, 139 L.Ed.2d 912 (1988), the Supreme Court explained as follows:
A defense is not part of a plaintiff's properly pleaded statement of his or her claim. See Metropolitan Life Ins. Co. V. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 1546, 95 L.Ed.2d 55 (1987); Gully v. First Nat. Bank in Meridian, 299 U.S. 109, 112, 57 S.Ct. 96, 97 81 L.Ed.2d 70 (1936) ("To bring a case within the [federal-question removal] statute, a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action.") Thus, "a case may not be removed to federal court on the basis of a federal defense, . . . even if the defense is anticipated in the plaintiff's complaint, and even if both parties admit that the defense is the only question truly at issue in the case." Franchise Tax Bd. Of Cal. V. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 14, 103 S.Ct. 2841, 2848, 77 L.Ed.2d 420 (1983).522 U.S. at 474-476, 118 S.Ct. at 925.
Caskey suggests that the state court's right to restrain attorneys from practicing or litigating in federal court is completely preempted by federal common law. While it is true that federal question jurisdiction will support claims founded on common law as well as the U.S. Constitution and federal statutes, not every claim implicating a body of federal common law will give rise to federal question jurisdiction. See Delgado v. Shell Oil Co., 890 F. Supp. 1324, 1348 (S.D.Tex. 1995), aff'd 231 F.3d 165 (5th Cir. 2000), cert. denied, 523 U.S. 972, 121 S.Ct. 1603, 149 L.Ed.2d 470 (2001) citing Illinois v. City of Milwaukee Wisconsin, 406 U.S. 91, 100, 92 S.Ct. 1385, 1391, 31 L.Ed.2d 712 (1972). "Defendants must still demonstrate that plaintiff's claims arise under federal law — i.e. that they satisfy the well — pleaded complaint rule." Delgado, 890 F. Supp. at 1348.
In Abcor, Inc., v. Kent, 534 F. Supp. 778 (D.Mass. 1982), the factual scenario was similar to the one before this court. Plaintiff sued its former attorneys in state court alleging breach of fiduciary duty and breach of contract (among other state causes of action) based on defendants' representation of a client in a case pending in U.S. District Court. Defendants removed the case alleging that plaintiff's state court lawsuit was an attempt to evade the rightful jurisdiction of federal court. Id. at 779. Granting plaintiff's motion to remand, the district court held:
Although 28 U.S.C. § 1654 and 2071 do provide this court with power to regulate the conduct of attorneys appearing before it, those sections do not give this court jurisdiction in this case. Historically, regulation of the conduct of attorneys has been left to the states. See Leis v. Flynt, 439 U.S. 438, 442, 99 S.Ct. 698, 700, 58 L.Ed.2d 717 (1979).Id.
Even if Caskey is correct in asserting that the state court lawsuit is related to the pending federal RICO complaint and the Freret Marine litigation, he is faulty in his logic. Although Dodson referenced and attached copies of those federal pleadings to his motion for contempt in the state court proceeding, the issues presented in the state court lawsuit are not thereby subsumed and transformed into a matter of original federal subject matter jurisdiction. The federal court pleadings were presented by Dodson as evidence in support of his assertion that Caskey and/or his agents continued to solicit and represent Dodson's clients during Dodson's and Caskey's professional association in violation of the state court injunction. Resolving the merits of Dodson's complaint does not require the state court to resolve a substantive question of federal law. Dodson's right to the relief requested requires only the application of state law to the facts before that court.
Accordingly, Dodson's motion to remand is GRANTED. IT IS ORDERED that this civil action BE AND IS HEREBY REMANDED in its entirety to the 19th Judicial District Court for the Parish of East Baton Rouge.
IT IS FURTHER ORDERED that any motions pending in the U.S. District Court are DISMISSED.